REMARKS FOR

JOSEPH H. BOARDMAN

FEDERAL RAILROAD ADMINISTRATOR

1 ^st TRANSPORTATION CONVENTION

WASHINGTON , D.C.

MARCH 7, 2008

Thank you, Joe for organizing this conference.   I can’t overstate the importance of the all the issues that have been raised here -- particularly private investment, partnerships, and greater state involvement – to relieving the congestion and stress in today’s transportation system,

The timely and efficient movement of goods across the country is critical to pushing the economy forward; however, ensuring safety must remain everyone’s top priority.

Sometimes these two issues, congestion and safety, are debated at different levels, by different people and at different conferences.   But I think they are mutually inclusive .   You can’t have a realistic plan for expanding capacity and throughput of our transportation problems without examining the safety issues that go with it.    And new technologies such as Positive Train Control and Electronically Controlled Pneumatic Brakes are delivering higher levels of safety and efficiency.

Safety is the top mandate for the FRA.   Our commitment to improving rail safety is strong, deep, and comprehensive. From track to locomotives to signals systems and the safe movement of hazardous materials, FRA is actively involved in all aspects of rail safety.  

Over the past few years, all the major rail safety trends have moved in the right direction:   fewer train accidents, fewer highway-rail grade crossing collisions, and fewer rail-related fatalities and injuries. In fact, earlier this week we announced that in 2007, railroad accidents declined for the third consecutive year.

There were 833 fewer train accidents in 2007 compared to 2004, almost a 25 percent reduction.   From 2006 to 2007, there were 406 fewer accidents.   And, highway-rail grade crossing fatalities decreased by 8 percent.

Much of this success stems from the Bush Administration’s National Rail Safety Action Plan , which identifies and addresses the key safety issues facing the nation’s rail industry. Since it was launched in 2005, we have achieved almost all of our goals laid out in the Plan.

And while these achievements are noteworthy, they should not blind us to the safety problems we must tackle today.

Nor can we forget the important role the railroads themselves play in ensuring safety for their employees, their passengers and the communities through which they operate. I remind railroad managers of that point constantly, and have told them that when FRA finds a safety problem, we will take all necessary and appropriate enforcement actions to make certain problems get corrected.

However, FRA’s mission is not to be just a collector of violation fines.   Our mission is to ensure safety.   We’d prefer to see railroads writing checks to improve their infrastructure rather than to pay fines to Uncle Sam, and they have started to do just that.

Companies investing in their infrastructure is something we want to see in addition to devising new and innovative investment approaches.

The Bush Administration and several U.S. governors have called for a fundamentally new federal approach when it comes to transportation projects that puts an end to wasteful earmarks, polluting traffic jams and politically driven investments that disregard the needs of commuters and shippers.  

We have a unique opportunity, thanks to technology and bold leadership, to unleash a new wave of congestion relief and capacity enhancement projects by better focusing federal resources and tapping into the more than $400 billion available today from private investors for transportation projects.  

For our part, FRA recently announced a $30 million grant program for states to study intercity rail service.   We want states – and maybe several states working together – to take the lead in developing intercity rail service that responds to the needs of travelers in their states.

We feel this is so important we asked Congress, again, for $100 million for this program for fiscal year 2009.

I don’t think there is a state which doesn’t have some sort of task force or commission studying new rail service.   Hopefully the Congressional representatives from all these states will get on the same page with their state and local officials and fully fund this grant program, just as I hope they will begin to get the message that the future of transportation infrastructure repair and development doesn’t begin and end with the federal government.  

Private industry, state, county and local governments must bear some of the burden.

All railroad companies have started this process, as they have increased investment in improved locomotive technology, new track, and track maintenance.

And although the rail business has been a little flat since the end of 2007, the investment community sees the relative strength of the industry and the future it holds.

Warren Buffet recently acquired a significant stake in Burlington Northern Santa Fe.   And he also bought heavily into a company which among other things makes railroad tank cars.

These acquisitions have made those in the transportation industry take notice, and many transportation experts believe the United States is headed toward a railway resurgence.   Which is good, because rail is a key solution to the congestion problem.

The U.S. Department of Transportation estimates that as the roads become busier, demand for rail-freight transportation will increase to 37 billion tons in 2035 from 19 billion tons in 2007, a 93 percent increase.

The reasons for this are simple.   You can’t haul coal or rocks on an airplane.   There aren’t enough tanker trucks in existence to carry the amounts of chlorine or other hazardous materials needed for our economy.   And for many of the other loads that could be carried by air or truck, no one can do it as cheaply and efficiently as a train.  

To keep up with the growth in rail, the investment will be large.   One study estimates $148 billion must be spent during the next 30 years to revamp the nation's rail system with new track, signals, bridges, tunnels, terminals and service facilities.

The country's largest railroads, known as Class I railroads, are expected to be responsible for about $135 billion of that amount.

Additionally, the cost to upgrade the nation's short line and regional railroads to accommodate the standard rail cars is expected to be about $7 billion through 2035.

The good news is that the railroads are starting to do their part to maintain and expand infrastructure.   The Class I railroads combined spent over $19 billion of their own money on maintenance, and $2 billion for capacity improvements in 2007, the highest level of investment in recent years.   And, they intend to spend more in 2008.

This build out comes as the industry transitions away from its chief role in recent decades of hauling coal, timber and other raw materials in manufacturing regions. Now, increasingly, railroads are moving finished consumer goods, often made in Asia , from ports to major cities through several rail corridors.

B y working with coalitions that may include several of our states, as well as the railroads, we have helped identify alternative funding sources for rail corridors for the purpose of reducing congestion.

A prime example of such efforts is the Heartland Corridor, which will increase rail capacity to handle freight between East Coast ports in Virginia and the Midwest .

This $150 million project – built with federal, state and Norfolk Southern funds -- is increasing the height of tunnels and removing other overhead obstacles to give double-stack intermodal trains a much shorter and more direct route from Hampton Roads to Columbus and then on to Chicago.

This direct route will shave more than 200 miles from the current routing.

The state of Virginia ’s investment in this project comes from a rail-enhancement program established in 2005 that is funded through car-rental fees.   This is a great example of forward thinking and creative planning that other states should consider.

Norfolk Southern's Crescent Corridor, a network of tracks between the New York City area and New Orleans, will provide a cheaper and more environmentally friendly alternative to widening highways such as Interstate 81, which runs through Virginia's scenic Shenandoah Valley.

And in Chicago -- the nation’s rail hub and the only city where all Class I railroads converge and exchange freight -- the $1.5 billion CREATE program is providing critically needed improvements to ease the flow of rail traffic from coast to coast much faster and more efficiently.

The initial set of projects cost are to be funded by several private railroads, the federal government, the State of Illinois , and the City of Chicago .  

DOT is a strong supporter of the CREATE Program. We consider it a significant landmark in private/public cooperation that could be used as a model elsewhere in the nation.

Another public/private success story is the Alameda Corridor that serves the Southern California ports of Los Angeles and Long Beach . 

By better separating trains from highway traffic, the Alameda Corridor has eased traffic on one of our country’s most crowded highways as well as congestion at the ports and is facilitating faster intermodal service between the West coast and markets in the Midwest and on the East coast.  

The $2.4 billion Alameda Corridor was built using funding from a multitude of government sources – federal, state, and local – as well as private investments from the railroads and revenue from bond purchasers.   The federal government provided a $400 million loan that private investors paid off early because the project has been such a tremendous success.

To further the goals of the Alameda and other corridor projects in California , the state recently announced $300 million for additional improvements.

In addition to the collaborative financing mechanisms for these corridors, there are “third party” projects, where non-railroad private-sector interests build and operate specific pieces of infrastructure, funding it through tolls or other user fees.

This approach is being explored for the Trans Texas Corridor, a proposed 600-mile transportation corridor from the Mexican border to Dallas , paralleling I-35.

The Trans Texas Corridor plans to parallel I-35 from San Antonio to Dallas as a toll road and pay $1.2 billion to collect fees from it for up to 50 years. Plus, they plan to develop a high-speed freight rail line along that route. The project would be financed through charges to shippers, but might also look for funding from the Texas Rail Relocation Fund or other federal and state programs.

Everyone benefits from this model of cooperation, including the environment.  

Shipping by rail uses about a third as much fuel as it takes by truck.   And one train can take 280 trucks off the road.  

As rail transport is becoming more efficient, logistics companies are building huge warehouse and intermodal facilities along train routes, bringing affordable shipping closer to manufacturers and farmers.

Through such private investment and partnerships we are also developing new technologies that will lead to even greater safety and efficiency on the rails, such as wayside detectors, track inspection vehicles, and innovative crash energy management systems.

Two of the most important opportunities available today are Positive Train Control, or PTC, and Electronically Controlled Pneumatic brakes, commonly referred to as ECP brakes.

We have advocated – and worked with the industry on – the implementation of PTC to prevent train collisions, overspeed derailments, runaways, and casualties to roadway workers.

Just over a year ago FRA approved the first system capable of automatically controlling train speed and movements to prevent certain accidents, including collisions, while improved railroad operational efficiencies.

The most significant development in terms of affecting the bottom line is ECP brakes. This past October, Norfolk Southern ran t he first revenue train fully equipped with ECP brake technology.   And just last month, BNSF began running its first ECP train.   And, Canadian Pacific plans to enter two ECP trains into service in 2008.     

Norfolk Southern, BNSF and CP are using ECP brakes as a direct result of a call from FRA to begin developing and utilizing this safety technology.   It’s a significant investment for them, but the results will show in faster and safer delivery shipments.

In the area of hazardous materials safety, we collaborated with the railroad industry on an accelerated research program into tank car structural integrity to make them less susceptible to damage during a crash.

Working with Dow Chemical Company, Union Pacific Railroad and the Union Tank Car Company, we developed the Next Generation Rail Tank Car Project.

The goal is to achieve significant advances in the design and construction of tank cars, particularly those that carry toxic inhalation hazard materials and other high-risk commodities.

This is a vital project for us, and we intend to propose new federal design standards for hazmat tank cars this year that will make tank cars 500 percent safer than current designs.

In today’s environment, the economic regulatory framework must ensure that needed capacity investments are not discouraged. Already, high levels of demand from shippers for rail services are exacerbating tensions between carriers and shippers, with some calling for more constraints on rail rates and revenues.

Since 1980, the Surface Transportation Board has administered the Staggers Act to ensure a favorable climate for rail infrastructure investment. It is important that the regulatory framework contributes to solving capacity problems rather than compounding them.

Clearly, finding accessible public funding for transportation is difficult, but I think that in rail, we have taken a good initial leap into greater private investment, partnerships, and greater state and local involvement.  

Going forward, we will continue to work with all parties to ensure the railroads become safer and more efficient while knocking down the barriers that impede our quest to change the way we finance our transportation infrastructure.

Thank you.